Every day, California employers run the gauntlet of California employment and wage and hour laws. Compliance with the state’s 100+ labor statutes, incorporated provisions from other codes, and myriad agency orders make understanding and complying with all relevant law next to impossible without competent legal help. Making the road even rougher, the California Private Attorneys General Act (PAGA), California Labor Code §§ 2698 to 2699.6, turns every employee into an enforcer of California labor law. To avoid costly consequences, employers need guidance on the best ways to avoid California PAGA claims.
California PAGA Claims Are a Serious Problem
PAGA allows any employee “aggrieved” by an employer’s non-compliance with California employment laws to bring a suit on behalf of all such similarly aggrieved employees. Employers wishing to avoid costly litigation often settle before suit is filed—sometimes even before notice of a California PAGA claim to the state, in which case the state never sees the benefit of the employee’s action. As a result, employers bear financial consequences, but employees see little of any award.
PAGA lets employees assist the state in enforcing labor laws by bringing a collective action against non-compliant employers. With every employee “deputized” to root out and prosecute employment law violations and serious financial consequences for every violation, employers are under the gun to comply with California’s quagmire of employment regulation.
Why California PAGA Claims Are a Serious Concern
On its face, PAGA does not appear to be particularly worrisome, but even baby teeth can result in a serious bite. A glut of plaintiff attorneys is ready to take up any employee’s claim whether valid or not.
PAGA cases are similar to class action employee suits in that they involve multiple plaintiffs, but the path is easier for PAGA claims, which need not go through the onerous class certification process. They also need not have a minimum number of plaintiffs, meaning a PAGA case can proceed with as few as one employee.
Although employees have only one year from the date of an alleged violation to assert a PAGA claim, the financial consequences for an employer found in violation of labor laws can be severe. The penalty amount under PAGA is $100 for each employee per pay period for the initial violation and $200 per employee, per pay period, for each subsequent violation. Since each violation is counted by pay period and by employees, the total penalties multiply very quickly. For example, a PAGA claim based on a paystub that did not include the employees’ last four digits of the employees’ social security numbers or the employees’ identification numbers would be multiplied by the number of employees affected and the number of pay periods involved. In this way, a $100 violation that occurred over two pay periods and affected 50 employees ($100 x 50) for the first violation, $200 x 50 for the subsequent violation) results in a penalty of $15,000.
How plaintiffs are pursuing PAGA claims is also a concern. Plaintiff employees are supposed to give notice to the California Labor and Workforce Development Agency (LDWA) before filing suit to allow the agency an opportunity to investigate the claims. However, counsel for plaintiff employees often attempt to negotiate a settlement with an employer before filing notice. Settlements reached in this way may subvert the purpose of the statute by denying the LDWA an opportunity to investigate the claim. Further, employers may be inclined settle to avoid the cost or publicity of a lawsuit in cases where the claims might not have been successful.
To Protect against PAGA Claims, Know the Weak Spots
Full compliance with California labor laws is a laudable goal but difficult to achieve, especially without help from an experienced California employer PAGA attorney. Plaintiff employees filing claims regarding violations they did not personally suffer exposes employers to a quickly increasing number of suits to defend against. That said, certain types of claims tend to be more common. Employers who work to achieve regulatory compliance in these areas are much less likely to face a California PAGA claim:
- Employee time records, including accuracy of time records.
- Wage and hour compliance, including paying for all work performed “on-the-clock,” paying at least the statutory or local minimum wage, and paying the correct overtime rate.
- Meal and break time compliance.
- Properly classifying employees, including exempt/non-exempt and employee/independent contractor classifications.
- Pay stub compliance, including ensuring that all pay stubs include statutorily required information, such as pay period, pay rate, and employer and employee information, in a clear manner.
In addition to these common areas for PAGA claims, employees also raise non-monetary, unusual claims, such as Canela v. Costco Wholesale Corporation. In that case, a greeter employee asserted that Costco had violated the requirement in California Wage Order 7-2001 that employers make seating available when the nature of the work permits its use.
Compliance Is Key to Avoid California PAGA Claims
Ensuring strict compliance with California employment laws, especially in the areas listed above, is critical to protect against PAGA claims. In addition to ensuring compliance in these individual “hot” areas of employment law, employers should also regularly do the following:
- Review internal policies in all areas for compliance with state law as written and in practice. An arduous task, this requires employers to consider the possible and actual effect of each employment policy on all categories of employees.
- Keep detailed records in all areas but especially regarding wage and hour matters.
- Follow up on employee complaints immediately to leverage PAGA’s cure provisions where applicable.
Employers looking for shortcuts to avoid California PAGA claims will be disappointed. Under Kim v. Reins International California, employers cannot avoid PAGA lawsuits merely by settling the representative plaintiff’s individual claims because the plaintiff stands in the shoes of the state in pursuing the action. Similarly, under Iskanian v. CLS Transportation Los Angeles, LLC, employers cannot require employees to waive PAGA claims to arbitration. In the end, only full compliance with all California employment laws will protect an employer from liability for PAGA claims.
The Final Step: Work with an Experienced California Employer Attorney
California PAGA claims can expose an employer to lengthy litigation costs and substantial penalties despite sincere and continuing attempts to remain compliant with all relevant wage orders, statutes, and regulations. Conducting occasional Internet research and reading employment law news cannot fully arm an employer to avoid California PAGA claims. An employer’s best resource is someone whose job is to know and litigate California employment laws for employers.
Whether you’re working to become or remain compliant with California employment laws and regulations or have been named as a defendant in California PAGA claims, you need experienced counsel to help you protect your business, and you’ll find that resource at the Law Offices of Susan A. Rodriguez, APC. With a practice focused on helping employers that spans three decades, Susan A. Rodriguez is invaluable in helping employers avoid and defend against PAGA claims and other employment law actions. For a consultation with an experienced California employer PAGA attorney, call today at (310) 350-9995 or complete our online contact form.
Posted by Susan A. Rodriguez, Esq.
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